In September 2008, the Federal Reserve Board approved Morgan Stanley's application to become a bank holding company. The investment bank highlighted its new access to the Fed's discount window "and other funding opportunities." Morgan Stanley's Utah-based industrial bank became a national bank. The company vowed to expand the retail banking services offered to its retail customers and build its core deposits from an Aug. 31, 2008 base of $36 billion.

Then in November of last year, it announced the appointment of Cece Sutton as president of the new retail banking group. Bank deposits grew to $46.8 billion by the end of the first quarter of 2009. By the end of June deposits had more than doubled to $105.7 million.

A lot of that growth was the result of the completion of the Morgan Stanley Smith Barney joint venture, but Sutton had already been building Morgan's retail banking business organically, and plans to both hire staff in New York and Charlotte and use Morgan Stanley Smith Barney offices as touch points from which to market an array of existing and new retail products to the joint venture's clients.

"Cece is a natural leader who digs into the details and really understands the products," says James Gorman, the chairman of Morgan Stanley Smith Barney. "She has an operations mentality and doesn't mind getting dirty under the fingernails."

Her area of oversight reflects the breadth of responsibilities Gorman's comment suggests. Sutton is responsible for building all aspects of retail banking for the firm's customers, including deposits, loans, the credit and debit card business, and mortgages. She was recently handed responsibility for managing Morgan Stanley's trust company, as well. The retail banking arm is about to introduce jumbo mortgages, home equity loans, and tailored lending, Sutton notes. It's also delving into middle-market and small-business lending.

Analysts speculate that a deal would be the logical next step but for now Sutton is talking about a focus on the existing customer base. "We're building business with these customers," she says. "We started with some very fundamental products, creating a retail operation from scratch, adding all the infrastructure and IT. After a great early start, now we're working toward a full banking product line-up for one of the largest wealth management bases in the business."

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